Correlation Between Citigroup and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Citigroup and Seagate Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Seagate Technology PLC, you can compare the effects of market volatilities on Citigroup and Seagate Technology and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Seagate Technology.
Diversification Opportunities for Citigroup and Seagate Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Seagate is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Citigroup i.e., Citigroup and Seagate Technology go up and down completely randomly.
Pair Corralation between Citigroup and Seagate Technology
Taking into account the 90-day investment horizon Citigroup is expected to generate 1.42 times less return on investment than Seagate Technology. But when comparing it to its historical volatility, Citigroup is 1.29 times less risky than Seagate Technology. It trades about 0.07 of its potential returns per unit of risk. Seagate Technology PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,832 in Seagate Technology PLC on August 27, 2024 and sell it today you would earn a total of 5,130 from holding Seagate Technology PLC or generate 106.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Seagate Technology PLC
Performance |
| Timeline |
| Citigroup |
| Seagate Technology PLC |
Citigroup and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Seagate Technology
The main advantage of trading using opposite Citigroup and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Seagate Technology can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Citigroup vs. Nu Holdings | Citigroup vs. HSBC Holdings PLC | Citigroup vs. Bank of Montreal | Citigroup vs. Bank of Nova |
| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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